NONLIABILITY AND LIMITATION ON LIABILITY

OF SECURED PARTY; LIABILITY OF SECONDARY OBLIGOR

(a) Unless a secured party knows that a person is a debtor or obligor, knows the identity of the person, and knows how to communicate with the person:

(1) the secured party is not liable to the person, or to a secured party or lienholder that has filed a financing statement against the person, for failure to comply with this article; and

(2) the secured party’s failure to comply with this article does not affect the liability of the person for a deficiency.

(b) A secured party is not liable because of its status as secured party:

(1) to a person that is a debtor or obligor, unless the secured party knows:

(A)that the person is a debtor or obligor;

(B)the identity of the person; and

(C)how to communicate with the person; or

(2) to a secured party or lienholder that has filed a financing statement against a person, unless the secured party knows:

(A)that the person is a debtor; and

(B)the identity of the person.

(c) A secured party is not liable to any person, and a person’s liability for a deficiency is not affected, because of any act or omission arising out of the secured party’s reasonable belief that a transaction is not a consumer-goods transaction or a consumer transaction or that goods are not consumer goods, if the secured party’s belief is based on its reasonable reliance on:

(1) a debtor’s representation concerning the purpose for which collateral was to be used, acquired, or held; or

(2) an obligor’s representation concerning the purpose for which a secured obligation was incurred.

(d) A secured party is not liable to any person under paragraph (2) of subsection (c) of Section 1-9- 625 of this title for its failure to comply with Section 1-9-616 of this title.

(e) A secured party is not liable under paragraph (2) of subsection (c) of Section 1-9-625 of this title more than once with respect to any one secured obligation.

Added by Laws 2000, c. 371, § 135, eff. July 1, 2001.